U.S.-China Trade Talks Start
The Trump administration and China have announced their first formal trade talks since President Trump initiated a significant trade escalation earlier this year. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet with Chinese officials led by Vice-Premier He Lifeng in Geneva this weekend.
This development represents the first high-level interaction between the countries since Vice-President Han Zheng attended Trump's January inauguration. While Bessent has tempered expectations, describing the meeting as focused on "de-escalation" rather than a comprehensive trade deal, the announcement has provided the first positive signal for businesses concerned about the record-level tariffs – currently at 145% on Chinese imports to the US and 125% on American goods to China.
The talks emerge amid a backdrop of global market volatility and supply chain concerns, with both sides appearing to soften preconditions for negotiations.
Forecast Scenarios (GCHQ)
Likely (55-75%): Partial De-escalation with Sectoral Carve-outs
Over the next 3-6 months, initial talks will likely yield modest tariff reductions in non-strategic sectors while maintaining restrictions on technology and defense-adjacent industries. Tariffs may drop to the 30-50% range for many consumer goods but remain higher for advanced technologies, driven by domestic economic pressure and market volatility concerns.
Realistic Possibility (45-55%): Extended Negotiation Stalemate
Initial Geneva talks could yield procedural agreements but little substantive progress over 6-9 months, with the 10% baseline tariff likely extended beyond 90 days amid constant escalation threats. Domestic political considerations in both countries make compromise difficult, particularly around technology transfer and industrial policy issues.
Unlikely (30-45%): Rapid Comprehensive Agreement
A swift comprehensive agreement within 3 months, with China agreeing to structural economic reforms while the US drops most punitive tariffs. This would require severe economic pressure beyond current projections coupled with unexpected geopolitical developments necessitating closer cooperation.
